SB 1861 Arizona Senate · 57th Legislature - Second Regular Session

taxation; omnibus; 2026-2027.

SB 1861 is an omnibus bill that updates Arizona's insurance premium tax rates and reporting requirements for the 2026-2027 fiscal period. The legislation primarily affects insurance companies operating in the state by establishing specific tax percentages for different types of coverage, such as fire, disability, and health plans, while also setting a new standard rate of 1.70 percent for most other insurance starting in 2021. Key provisions include a lower tax rate of 0.66 percent for fire insurance on properties in cities that use private fire companies, along with rules for how those tax funds are distributed to local fire districts and retirement systems. Additionally, the bill mandates that insurers submit annual reports detailing their premium income and tax payments, with larger insurers required to make monthly tax deposits throughout the year. The measure also clarifies definitions for calculating taxable fire insurance and allows for electronic submission of reports and payments.

Bill status in committee 1 of 4 stages cleared

Introduction

Jun 2026

Committee Review

Floor Vote

Governor

Introduced Jun 9, 2026 Last action Jun 11, 2026

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What changed between versions

Introduced Version → Senate Engrossed Version · 7 edits

MODERATE

This bill updates Arizona's tax code to reflect new federal tax laws and adjusts various tax rates and credit thresholds for the 2026-2027 period. It primarily revises the Internal Revenue Code reference dates to align with future fiscal years and increases standard income tax deductions and dependent credits to account for inflation and legislative changes.

Scope change

The bill expands the scope of the Internal Revenue Code definition to include provisions effective from 2025 and 2026, ensuring Arizona tax calculations remain synchronized with federal updates.

DEFINITION

Updated the definition of the 'Internal Revenue Code' in multiple sections to reference specific effective dates in 2025 and 2026, ensuring Arizona tax laws align with future federal tax provisions.

TIMELINE

Extended the timeline for the 'Credit for Increased Research Activities' to apply through 2030, with adjusted credit percentages for years after December 31, 2030.

ELIGIBILITY

Increased the standard income tax deduction amounts for single, head of household, and married filing jointly taxpayers to $15,750, $23,625, and $31,500 respectively, effective for tax years beginning after December 31, 2025.

Raised the dependent tax credit amounts from $100 to $125 for children under 17 and from $25 to $30 for older dependents, with corresponding adjustments to income phase-out thresholds.

Increased the capital investment thresholds required for manufacturing facilities to qualify for infrastructure funding, raising the requirement from $500 million to $3 billion for large counties and from $50 million to $100 million for smaller counties.

FISCAL

Adjusted the maximum funding limits for infrastructure improvements related to manufacturing facilities, increasing the total cap to $350 million for periods after June 30, 2028.

Raised the income limits for property tax exemptions for widows, widowers, and persons with disabilities, adjusting the assessment and income caps to reflect inflation and updated federal standards.

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Full legislative history

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Key actions

Committee

Jun 11, 2026

Upper · Passed

upper

Jun 10, 2026

Upper · Passed

upper

1 primary · 0 co-sponsors